Hydrocarbon Oils Strategy

Tied Oils: losses and gains: Q&A

This Q&A section is intended to provide guidance in this area of the scheme.

Q: Are any tied oils used for ‘washing’ process lines / vessels? If so, how are these recorded within the audit trail and on the return form?

A: This constitutes an eligible use and should be recorded in Box 10.

Q: Are tied oils contained in a ‘closed system’ ie pipeline from storage to process, thus making the possibility of pilferage harder?

A: If the only access to the oils system is the ingress (inlet) to the stock tank, and there are no egress (outlet) points between the storage tanks and the processing plant, the system is secure and there should be no losses by theft. Consideration should be given to the amount of product that may be held in these lines when trying to identify losses. There may be losses by leakage.

Q: How are measurements undertaken ie physical dips etc?

A: Physical dips of stock tanks can lead to minor differences or inaccuracies in the stock readings. This is because the angle at which the reading is taken can result in an over- or under-reading, and the larger the surface area of the oil, the larger the inaccuracy.

Q: Does the trader use standard SGs, actual SGs or a combination of both?

A: It is important that conversions are undertaken using a consistent method. Differences in the units used can cause major differences in volumes involved leading to losses and gains.

Q: How is work in progress accounted for on the return form, as this could create a discrepancy between the stock figures and the box 10 amount?

A: The timing of the recording of this oil as being used is critical. Most businesses will only record the use when the batch is complete, even though the oil was removed from stock earlier in the period, or even in a previous period. This can lead to discrepancies, but over a period of time, these anomalies should even themselves out.

Q: If any tied oils are taken from stock and used in lab work are these amounts recorded on the return form?

A: These amounts should be recorded in Box 10, as it is an eligible use.

Q: Are there any processes that also involve partly recovering tied oil, if so how are these amounts recorded on the return form?

A: Once oil has entered the processing plant and has been recorded in Box 10, it may be partially recovered within the plant and re-used. Provided it is not removed from the plant, it does not need to be recorded anywhere, as it is still in use within the processing plant.

Q: What does ‘partially recovered’ mean / entail? What if the process involves significant quantities of partially recovered oil? Should it be entered back into box 5?

A: Some traders have methods of recovering part of the oil. For example, if the oil is used as a catalyst in a chemical reaction, once the reaction is completed, the oil is still left, but it then contains some of the chemicals involved in the reaction. This is effectively partially recovered oil, but it stays in the reaction vessel and is re-used until it becomes too contaminated to allow the reaction to take place. At this point the oil is removed from the system and it would be at that time that it would be recorded in Box 5, provided it was still deemed to be an oil. Once the oil has entered the processing plant, it only needs to be recorded in Box 5 if it is removed from the processing plant for either recovery or disposal.

Q: Does extraction / vaporisation occur during the process? If so these figures should not be included on the return form, as the amounts should already be included in box 10.

A: Once the oil is put in to the processing plant, it is expected that the oil will effectively disappear, as this is part of the process. Any vapour losses are not accountable, as it has happened as part of the eligible process.

Q: On completion of the manufacturing process are products sent to quality control?

A: If the product being tested does not meet the required specification there could be a recommendation for additions of tied oil, if so how are these additions recorded and reduced from stock?

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